Special Bulletin Report: Bells, Cable Companies Get Last-Minute FCC CableCARD Waivers
More than 100 pay-TV providers got a last-minute reprieve from an FCC ban on combining security and navigation functions in inexpensive set top boxes after July 1, 2007. At about 8 p.m. ET Friday, the Media Bureau unveiled a conditional order granting the petitions of Bells including Qwest and Verizon, telecommunications companies including CenturyTel and small municipal and privately owned cable operators. Several other small cable operators got full waivers from the bureau, while 9 companies got a brief reprieve from the integration ban. As FCC Chairman Kevin Martin had publicly suggested, a waiver for the entire cable industry sought by the National Cable and Telecommunications Association (NCTA) was denied. Consistent with Martin’s comments, many video providers must start all- digital networks before the broadcast digital TV transition to get the exemptions.
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Those getting conditional waivers have until Feb. 17, 2009 to convert pay-TV systems to all-digital video, said a bureau order. The waivers resemble several granted by the bureau in January and May (CD May 7 p1). Pay-TV providers using Internet Protocol, QAM/IP networks and asynchronous transfer mode operations will not have to separate security and navigation functions until July 1, 2008, because only integrated set-top boxes work on those networks, said the order.
The FCC will hold off for three months on enforcing the integration ban on nine video providers, which the bureau said will give them time to order compliant devices from set-top box makers such as Cisco’s Scientific-Atlanta and Motorola. Video providers that demonstrate they cannot get the devices by Sept. 1, 2007, may seek a “limited extension of that date,” said the order. It cautioned, “We do not expect to routinely grant such requests.” The cable operators should use the extension to “take all steps possible to come into compliance with the separated security requirement. Starting from the date of this order, petitioners must place orders for compliant devices,” said the bureau. Those getting a three-month reprieve are Armstrong Utilities, Atlantic Broadband, Bresnan, Cable & Communications Corp., Knology, NPG Cable, Orange Broadband, Suddenlink and Sunflower Broadband.
In granting the enforcement delay, the bureau clarified that no cable operator can provide customers with used, non-CableCARD boxes purchased after July 1. Some of the companies asked whether the FCC would consider such devices “new,” said the bureau. No, it said, citing a 1999 agency order. Cable operators can recycle old boxes only within the same company that originally bought them, allowing a cable operator to redeploy a device to another customer but not purchase one secondhand. “Once such a box is transferred to a third party, it will be treated as a ‘new’ device for purposes of Section 76.1204(a)(1).” The bureau dismissed the assertion of Armstrong and other waiver seekers that they should get exemptions until downloadable security is available, which may take three years. The bureau pointed to a product from Beyond Broadband Technology which the regulator said will be available by year’s end. “We do not believe, however, that cable operators should be able to shield itself [sic] from the clear directives of the Commission’s rules implementing Section 629 by asserting that a better approach is on the ever-expanding horizon,” said the order.
In denying NCTA’s waiver, the bureau said the group’s arguments were not new and the cable industry already got several delays of the integration ban. Massillon Cable’s petition was denied, but the bureau added it will consider a stay of enforcement to review the company’s claim it will not receive boxes on-order until after July 1. The bureau granted a temporary exemption sought by Crosslake, Minn.’s cable operator so it can take delivery of boxes ordered before the integration ban. Guam Cablevision got a waiver until Dec. 31, 2009 because of what the bureau said were special circumstances. The company’s operations were hurt by multiple typhoons over the past few years, plus it is isolated from the continental U.S.
Reaction to the waivers was mostly predictable, with cheers from Verizon and jeers from NCTA. Verizon said the waiver will help it roll out its FiOS pay-TV service, which it noted competes with cable operators. An NCTA spokesman wondered why cable customers should have to pay more for CableCARD-equipped boxes when they could get digital TV on cheaper devices. “Given that retail devices are already supported by CableCARDs, why should consumers across America pay more for set-top boxes they lease with no additional features and functions?” asked Rob Stoddard, NCTA’s senior vice president for public affairs. The Consumer Electronics Association, having opposed many of the waivers, said CableCARD rules will give consumers more choices in cable equipment. A retail market for such devices “will result in lower prices and promote greater innovation,” said a CEA spokesman. “We will continue to work with the FCC to fulfill Congress’ vision of such competition.”